Overshadowed by the war in Ukraine and the war between Israel and Hamas, the new crisis in the South Caucasus that erupted at the end of the summer of 2023 was barely noticed. On September 19, Azerbaijan launched a military offensive on Nagorno-Karabakh that lasted less than a day. The authorities in that separatist region quickly capitulated before the overwhelming enemy. Thus they recognized the final defeat of the idea of an independent Republic of Artsah, their name for the area. The defeat was accompanied by a humanitarian tragedy in which more than a hundred thousand Armenians left the region and fled to Armenia. After 35 years of severe ethnic and territorial conflict that resulted in great hatred on both sides, there was no life for the Armenians of Nagorno-Karabakh under Azerbaijani rule.
The roots of this conflict are usually sought in the events after the First World War and the collapse of the Russian Empire. After foreign interventions in the Caucasus, the declarations of independence of Armenia and Azerbaijan and their war, by the decision of the Caucasus Bureau of the Russian Communist Party (the Bolsheviks) in 1921, Nagorno-Karabakh as an autonomous region (NKAO) became the part of Azerbaijan. The Armenian majority never accepted this, but in the totalitarian Soviet Union, the will of the citizens was not listened to on such issues. Only with the coming to power of Mikhail Gorbachev in 1985 and the beginning of Glasnost and Perestroika the old problem resurfaced on the agenda. Gorbachev's reforms were supposed to make the Soviet political system more efficient by giving citizens the opportunity to express criticism. Instead, criticism began to destroy the system, not the bad policies within it. Shortly after the presentation of public demands by the Armenian and Karabakh public in 1987 for the unification of the NKAO with Armenia, in February of the following year the Soviet of the NKAO passed a resolution on the transition of the region from the Azerbaijan SSR to the Armenian SSR.
The situation worsened after that. Killings and persecutions in Armenia and Azerbaijan followed, which increased the hatred between the two sides. After the failed coup against Gorbachev in August 1991, it was clear that the Soviet Union no longer had a future, and individual Soviet republics began to declare independence. The NKAO also declared its independence as the Republic of Nagorno-Karabakh (as of 2017 the Republic of Artsakh) even though it had no right to do so under the Soviet and Azerbaijani constitutions. A full-scale war between Armenians and Azerbaijanis broke out in May 1992. Azerbaijan had more weapons, but at the same time suffered from the weaknesses of its state and military organization. Consequently, the forces of Armenia and Nagorno-Karabakh conquered not only the entire region, but also seven Azerbaijani regions around it. Because of these defeats, the head of state of Azerbaijan was replaced: in the fall of 1993 an old Soviet and Azerbaijani official Heydar Aliyev became the new president. He stabilized the internal political situation in the country, but his inability to return the occupied territories led to the signing of the ceasefire in Bishkek in May 1994, which ended the First Nagorno-Karabakh War.
From then until 2023, numerous attempts to resolve the conflict have failed. In addition to Armenia and Azerbaijan, France, Russia, and the USA were primarily included in these attempts, within the Minsk Group, which was founded by CSCE in 1992. Representatives of Nagorno-Karabakh did not participate in the negotiations because Nagorno-Karabakh was not an internationally recognized state, and the Azerbaijani authorities did not want to negotiate with them. The Armenian side was represented by the president (since 2018, the prime minister) of Armenia. One of the first proposals of the Minsk Group for solving the crisis was formulated in 1997. The first was a “package solution” according to which the agreement on the status of Nagorno-Karabakh and the return of other occupied regions to Azerbaijan would take place simultaneously. In principle, this was acceptable to the Armenians, as they could exert additional pressure on Azerbaijan, which was impatient to get the occupied territory back as soon as possible and not to be blackmailed by concessions regarding the status of Nagorno-Karabakh. A gradual solution, in “step by step” manner, was therefore more acceptable to the Azerbaijani authorities. According to it, Armenians would have to return all occupied regions except Nagorno-Karabakh, and then its future status would be negotiated. Later, other proposals and activities were created, such as the Prague Process in 2002-2007, and the Madrid Principles of 2009, but none of that could lead to an end to the conflict.
The engagement of the presidents of all three powers and the colorful meetings of the Armenian and Azerbaijani presidents only froze the conflict and delayed its resolution. Time worked for the Azerbaijanis, but not for the Armenians. Although one might think that after the passing of years, the occupied territory would eventually belong to the Armenians by the mere fact of long occupancy, for the final solution of the conflict it was important who would become militarily stronger over time. For Armenia, achieving supremacy would mean that it would preserve at least Nagorno-Karabakh, if not the other occupied regions, and for Azerbaijan their return under the sovereignty of Azerbaijan. Each side seemed to be able to achieve its goals through a successful external and internal balancing of power.
External balancing could be achieved primarily by acting in the immediate neighborhood. In the early 1990s, both countries became members of the Collective Security Treaty (CST) signed between several post-Soviet states. When it was supposed to be extended for another five years in 1999, Azerbaijan stepped out of the agreement. In 2001, the treaty grew into the Collective Security Treaty Organization (CSTO), as a sort of Russian counterpart to NATO with Armenia as one of the members. With it, Russia gained a political and military foothold in the South Caucasus because it had its military forces in that country, but also the obligation to protect it in case of attack. By allying with Moscow within the CSTO, Armenia gained a strong ally, but its external borders remained uncertain. Apart from Azerbaijan, Turkey has also never established diplomatic relations with it and closed its border in 1993 due to the First Nagorno-Karabakh War. Iran had a short border with Armenia and close political relations, but due to its limited influence in the Caucasus, this did not mean much to it. Finally, the favor of France and the USA due to the strong Armenian lobbies in those countries did not help much, as they were mostly uninterested in the Caucasus and too far away to exert their power in that region. For this reason, the Armenian external balancing of power remained limited in scope with the hope that an alliance with Russia would be able to prevent an attack on it and Nagorno Karabakh. The rebel region, on the other hand, could not balance power externally because it was not recognized by any country, not even by Armenia on which it depended.
The obligation to protect Armenia within the CSTO did not concern the protection of Azerbaijani territories that were under Armenian control. Therefore, there was no obstacle for Baku and Moscow to develop good relations although they were not formal allies. Moreover, until 2012, Russia leased the large Soviet-era Gabala radar base to Azerbaijan and sold its weapons to Azerbaijan, as it did to Armenia. The Kremlin sought to play a significant role in the region and sought to station its peacekeeping forces there. This would create the impression that Russia is a neutral actor between the two sides and at the same time prevent foreign powers from entering the Caucasus. The Kremlin found an additional motive to cooperate with Baku in the oil and gas trade that abounded in the Caspian basin. Although it could not prevent Azerbaijan from building its gas and oil pipelines for export to world markets, it wanted to at least preserve some influence in the region by offering its cooperation in energy trade. Baku was not very interested in strengthening Russia's role, but according to some data, Azerbaijan bought over 5 billion USD worth of Russian weapons in the 2010s alone. Such relations enabled Baku to have no enemies in the Kremlin and to simultaneously maintain close relations with other international actors, especially with ethnically and culturally related Turkey. The alliance with Turkey allowed Azerbaijan not to have to worry about being isolated or “backed into a corner” in the event of a renewed war over Nagorno-Karabakh.
In addition to external balancing, Armenia and Azerbaijan needed to find internal sources to strengthen their military power. Armenia and Nagorno-Karabakh had weak economies that failed to develop due to the lack of natural resources, problems inherited from the Soviet era, bad economic policies, and isolation from two sides – Azerbaijan and Turkey. According to the World Bank, the GDP of Armenia in 2000 was 1.91 billion USD, and in 2022 it was 19.5 billion USD. Because of this, the Armenian military budget remained insufficient for the armed forces to be strongly modernized and strengthened. In addition, Armenians were divided among themselves because the Karabakh problem burdened Armenia, and its politicians of Karabakh origin sometimes occupied the highest state positions, such as those of the president of the republic, prime minister and ministers. When in 1997 President Levon Ter-Petrosyan proposed accepting a “step by step” solution, he lost support among the political elites. The plan was also criticized by the Karabakh authorities and he resigned in 1998. He was succeeded by the former president of Nagorno-Karabakh and former prime minister of Armenia, Robert Kocharyan. The stabilization of the political system and the creation of a consensus on the Karabakh issue were hampered by the assassination of the prime minister, the speaker of the parliament and some other high-ranking officials in the parliament in 1999, the unsuccessful democratic transition that would have strengthened the state, and the weak rule of law. In addition, the leaders of Nagorno-Karabakh did not always agree with the Armenian authorities and demanded that they be represented in the negotiations with Azerbaijan, which Baku never accepted.
The internal balancing of power was more successful for Azerbaijan. Although the authoritarian regime in that country was harsher than in Armenia, it was precisely the monolithic nature of the regime that prevented conflicts over the attitude towards Armenians. In addition, the position of the injured party and the large number of exiles from the occupied regions created pressure not to yield to the enemy. Despite this, President Heydar Aliyev (1993-2003) was reportedly ready to cede Nagorno-Karabakh in exchange for a land link with the Azerbaijani exclave of Nakhichevan at negotiations in Florida in 2001. It seems that this was acceptable to the Armenians, but Aliyev soon gave it up due to the impossibility of getting support from Azerbaijani side. His son Ilham Aliyev succeeded him as president in 2003 and continued negotiations, but nothing much changed until 2020. The economic element of Azerbaijan's internal balancing of power until the mid-2000s was not as significant as Armenia's. According to data from the World Bank, the GDP in 2000 amounted to only 5.27 billion USD. After the new oil pipeline to the Mediterranean port of Çeyhan in Turkey and the South Caucasus gas pipeline to the Turkish city of Erzurum were opened in 2006, a strong growth in oil and gas export revenues began. This significantly contributed to the fact that by 2022, the GDP of Azerbaijan has grown almost 15 times, to 78.72 billion USD. Earnings from the export of energy products enabled the growth of allocations for the armed forces. According to some estimates, within a few years of the opening of the gas and oil pipelines, the Azerbaijani military budget was larger than the entire state budget of Armenia. According to the Stockholm International Peace Research Institute, Armenia's military spending in 2020 was 634 million USD, and Azerbaijan's was 2.238 billion USD.
The different results of balancing of power by Armenia and Azerbaijan decided the solution to the conflict. Although Russia's behavior and influence during this period cannot be ignored, they too were probably the result of this balancing act. When, for example, Armenian Prime Minister Nikol Pashinyan criticized Armenia's reliance on Russia, the Kremlin did not take it well and probably because of that partly distanced itself from Armenia. Turkey, on the other hand, remained a stable ally of Azerbaijan, which did not irritate the Kremlin, and finally in 2020, Baku estimated that it could launch a major military operation that turned into a war. The outcome showed that the long wait to recapture the territories was worth it because in the process of balancing of power, Azerbaijan was more successful than Armenia.
The second Nagorno-Karabakh war lasted only six weeks until Pashinyan asked Putin to mediate in the negotiations. If the Armenians had not relented, the entire Nagorno-Karabakh would probably have fallen into Azerbaijani hands due to Azerbaijani military might and Turkish support for Baku. After the armistice, the Russian influence in the region also strengthened, because now the Russian army, in the capacity of peacekeeping forces, came to the territory of Azerbaijan for the first time, i.e. to the part of Nagorno-Karabakh that the Armenians still controlled. It was supposed to be there for at least five years, but the Armenian-Azerbaijani negotiations did not succeed, and the situation intensified again by the fall of 2023. When Baku launched the offensive in September, the Kremlin again did not react, and the Armenians capitulated after more than 35 years of conflict. They agreed to dissolve the Republic of Artsakh and the exodus of the remaining population to Armenia began. In mid-October, President Aliyev unfurled the Azerbaijani flag in the empty capital of the region, Khankendi. By not agreeing to the broad autonomy offered to them by Baku in previous years (although it is questionable how sincere that offer was), the Karabakh Armenians lost everything, while Azerbaijan gained Nagorno-Karabakh without any compromise and concessions that it had at least declaratively offered to the Armenians.
The identity conflict that claimed around 30 thousand victims and created over a million exiles ended as a zero-sum game – with one absolute winner and one absolute loser. However, the consequences are wider because it is questionable how much Armenia, which is disappointed with Russia, will rely on it. The question thus remains how much Russian influence will remain in the region. It will not completely disappear because Russia is Armenian neighbor and a superpower, but also because Azerbaijan, which is the winner in this conflict, cannot ignore its proximity and power.
